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Condor Gold settlement 'clears way' for mine construction at La India

Last updated: 11:15 09 Dec 2016 GMT, First published: 07:24 09 Dec 2016 GMT

picture of drill rig
The drill rigs have begun work tapping the potential of the La India project.

Condor Gold PLC (LON:CNR) has settled the dispute with its neighbours in Nicaragua over royalties on its La India licence.

The junior has been embroiled in litigation for four years with B2Gold and Royal Gold following a swapping of concessions in the country in 2010.

Under the settlement now agreed, Condor will pay a net smelter royalty (3%) on any gold produced from 90% of the La India acreage.

In addition, Condor has agreed to buy 3,508 hectares of land rights from B2Gold covering the mine site infrastructure and mineral deposits.

In exchange, it has handed B2Gold its 20% shareholding in Cerro Quiroz, the owner of the concession adjacent to B2Gold’s producing mine at  La Libertad.

Mark Child, Condor’s chief executive, said the settlement provides clarity to potential funding partners and clears the way to progress Mina La India to construction.

“The purchase of the land surface rights removes an obstacle to construction, not least because B2Gold undertook litigation against Condor in Nicaragua in relation to these rights.

“The purchase of land surface rights will facilitate negotiations with local land owners.”

Condor’s aim is for a 1mln tonne processing plant and production of 100,000 ounces of gold annually.

La India is currently estimated to be host to 2.31mln ounces of gold at a respectable 4 grams per tonne.

Condor has just started scout drilling again in the area around La India with the hope of developing into a world-class asset, or ‘a district play’.

Child says that only 13.2km of an estimated 105km of gold veins have been tested on its licence areas.

The first 2,000m of drilling has three objectives:

  • To expand mineralisation and identify ore-shoots in the El Cacao portion of La India. It is already host to 58,000 ounces of gold at 3 grams per tonne.
  • To expand mineralisation at the Cristalito-Tatescame target where there are 34,000 ounces at 5.3 grams.
  • To test for mineralisation on the Andrea Vein, which has never been drilled.

“Although each is currently relatively small, we believe that both have excellent potential to host much larger gold resources,” Child said.

The settlement with B2Gold and Royal Gold is likely to take around three months to complete. 

Shore Capital said: “On the bright side, the settlement of the NSR dispute and the acquisition of the land surface rights de-risk the La India project and removes obstacles on Condor’s path to production.”

Condor shares rose 4.5% to 58.5p.

-- updates for broker comment, share price --

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